FILE - This Tuesday, July 16, 2013, file photo shows signage at eBay headquarters in San Jose, Calif. EBay Inc. reports quarterly financial results on Wednesday, Oct. 15, 2014. (AP Photo/Ben Margot, File)

FILE - This Tuesday, July 16, 2013, file photo shows signage at eBay headquarters in San Jose, Calif. EBay Inc. reports quarterly financial results on Wednesday, Oct. 15, 2014. (AP Photo/Ben Margot, File) (AP)

EBay Trading Higher on Strong PayPal Results Ahead of Spinoff

By Technology FOXBusiness

Investors are buying shares of eBay (EBAY)  after the company reported better than expected quarterly results driven in part by its PayPal unit which is expected to be spun off in the third quarter.

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“We had a strong first quarter, with eBay and PayPal off to a good start for the full year,” said eBay Inc. President and CEO John Donahoe.

PayPal net total payment volume (TPV) grew 18% in the first quarter to $61 billion, while it gained 3.6 million new active accounts in the quarter, up 11% to 165 million, and processed more than 1 billion transactions in the quarter, up 24%.

Paul Vogel, an analyst at Barclays expects this growth to continue saying: “While overall growth is still sluggish at marketplaces, the lack of incremental downside coupled with a pretty strong quarter at PayPal should provide some upward momentum for eBay.” Vogel raised his price target on eBay to $67 from $62.

The payments units helped revenue expand by 4% to $4.45 billion, while profits were $943 million, or adjusted earnings of 77 cents a share. This compared to earnings of $96 million, or 79 cents a share, in the same period a year earlier.  Both exceeded analyst estimates.

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Shawn Milne, an analyst at Janney believes eBay’s playbook of driving traffic to its top-rated sellers should ultimately improve the buying experience, and an improving search/selection and an improved buying experience should further stem market share losses. He also expects strong growth at PayPal.

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“We believe the separation creates the opportunity for eBay/PayPal to execute with more focus and thus potentially becoming more attractive for M&A,” notes Milne.

Ebay now expects to earn as much as much as $3.15 per share for 2015 with revenue reaching as much as $18.8 billion.

At least fifteen analysts raised their price targets on the shares, according to Thomson Financial, including Citigroup which expects the shares to reach $68.

Ebay now expects to earn as much as much as $3.15 per share for 2015 with revenue reaching as much as $18.8 billion.

At least fifteen analysts raised their price targets on the shares, according to Thomson Financial, including Citigroup which expects the shares to reach $68.

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